UK July Services Sector Activity Shows Marginally Faster Growth

Activity in the U.K.'s services sector reported modestly faster growth in July from June's four-month low, but business confidence remained relatively subdued reflecting economic uncertainty, a survey showed Thursday.

Financial information firm IHS Markit Ltd. said its purchasing managers index for the services industry, which accounts for some 80% of the U.K. economy, rose to 53.8 in July from 53.4 a month earlier. This was slightly below the expectations of analysts polled by The Wall Street Journal, who forecast a reading of 53.9.

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The 50-point lines separates expansion from contraction in activity.

"The services sector offered a hesitant start to [the third quarter], with only marginally faster growth, a muted level of new orders and subdued business confidence," said Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply.

"Hopes of a stronger performance in the latter half of the year are ebbing away," he said.

The U.K. economy has slowed markedly this year as inflation, which accelerated sharply after the pound's steep post-Brexit depreciation, began to outpace wages and squeeze consumers--a key engine of growth.

Earlier this week, the PMI survey showed that U.K. manufacturing activity growth accelerated in July, as strong exports boosted orders, signaling that production may take up some slack from the consumer this quarter.